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Health In 2 Point 00

Save the Country with Preventive Care

We are entering the season of presidential politics, of bunting and cries of “What about the children?” and star-spangled appeals to full-throated patriotism.

So here’s mine: Do you count yourself a patriot? Do you care about the future of this country? (And while we are at it, the future of your hospital.) If so, bend your efforts to find ways to care for the least cared for, the most difficult, the chronically complex poor and uninsured.

“But we can’t afford compassion!” Wrong, brothers and sisters, we cannot afford to do without compassion. “But why should we pay to take care of people who can’t take care of themselves?” Because we are (you are) already paying for them — so let’s find the way we can pay the least.

The problem of the overwhelming cost of the “frequent fliers,” people with multiple poorly tracked chronic conditions, has always been that the cost was an SEP — “somebody else’s problem.” Now, increasingly, hospitals and health systems are finding that they are unable to avoid the crushing costs of pretending it’s not their problem, are not being paid for re-admits, and are finding themselves in one way or another at risk for the health of whole populations. They’re also facing more stringent IRS 990 demands that they demonstrate a clear, accountable public benefit.

At the same time, employers and payers are realizing that they end up paying the costs of the uninsured as well as those of the insured who are over-using the system because they are not being tracked. These costs become part of the costs of the system, and the costs are (and must be) shifted to those who do pay. There is no magic money well under the hospital.

Wait, Wait — Save the Country?

Follow the bouncing ball of the logic here: We must do something about deficit spending, right? Austerity budgeting shafts the economy (as has been vividly demonstrated in Europe), so bringing down the deficit needs to be done gradually. But it needs to be done. Over time, the deficit must be brought down into line with the growing economy. With me so far?

Analysis shows that by far the biggest chunk of the deficit is the continuing and projected rise in health care costs. The rise is from the direct costs to the federal budget of Medicare, military, veterans and federal employee health care spending as well as the rising tax costs of private employers’ deductible health plans. Plus, the “health care tax” of putting 18 percent of everything toward medical cost puts a drag on the economy — and a dragging economy means lower tax revenues.

If we spent the same percentage of GDP on health care as Canada, the UK or Germany, we would have no deficit crisis. The deficit would disappear like frost on a sunlit morning. If we do not succeed in lowering health care costs significantly, no amount of cutting National Parks or NASA or education budgets will ever solve the deficit crisis, because those budgets are vastly smaller. It can’t be done. So lowering health care costs is a do-or-die national priority. The health care crisis and the deficit crisis are the same thing.

What are those costs and how do we cut them? Seventy percent to 75 percent arise from chronic conditions. The majority of those arise from behavior, and almost all of them could be better managed to make cases cheaper by making patients healthier.

Who is spending the money, using the health care resources? This follows a Pareto distribution: 20 percent of the people spend 80 percent of the money; 5 percent of the people spend half the money; 1 percent of the people spend 20 percent of the money.

Who are the 1 percent? Some just got prostate cancer or got hit by a bus. This is their year to be expensive. But a substantial portion of that 1 percent and that 5 percent stay in the same category year after year. So a small percentage of the people use a large percentage of the health care resources by crossing your threshold, showing up in the ED and the hospital over and over with the results of their untreated, unmanaged, untracked chronic disease, addictions and mental problems. And recent studies show that people who have health care coverage (and therefore a regular relationship with a primary care doctor and a health care system) cost the overall system half as much as people without coverage.

Bingo! There’s the treasure, because experience shows that getting aggressive with untreated chronic disease can substantially lower costs. Trying to ignore them is costing us dearly. It’s time to change course.

The Treasure Is There

When Rumi said, “Burn down this house! The treasure you seek is beneath the floor,” he presumably was speaking of spiritual treasure. Yet last year in the South Indian state of Kerala, some devotees sued the maharaja running a local temple, concerned that the temple’s treasury was being mismanaged and possibly looted. The Supreme Court of India dictated that the subterranean vaults of the temple, sealed for 125 years, be opened and an accounting made. The official party found gold and jewels in one vault alone valued at an estimated $22 billion — and a second vault has yet to be opened.

Health care’s treasure has been hidden not in some subterranean sealed vault but in plain sight: It is those thousands and millions of cases of poorly treated and untracked chronic disease that flood our EDs every day. We can mine those to reduce health care costs drastically, put our hospitals and health systems on a much more sound economic footing, make people much healthier and, by the way, save the country.

How? Six ways.

Coverage. Push to get everyone covered, one way or another, whether the Affordable Care Act survives or not, including even those whom the ACA does not cover, even the illegal aliens, the homeless and crazy and addicted people wandering the streets. Why? Because they end up in your ED. You’re the dumping ground for the problems society keeps trying to ignore. And this is not just about you getting compensated for your costs. To the extent possible, it should be about health coverage attached to the person. If they are covered, it is much easier to fashion preventive and outreach programs to keep them from your door.

This coverage has to be implemented at the state and local level, both directly through public programs and through “safety net” supplemental insurance programs subscribed by the health plan industry. Get everyone covered, and two things happen: The covered people cost the system less, and less of that cost is an unrecoverable cost to you.

This is a very difficult goal, because people do not understand that this is a way to spend less money not more, that covered people cost the system half as much — and it is the rest of us that end up paying those costs. Health systems must campaign for such truly total coverage at every political level, for their own survival and for the good of the country.

Shift in risk. Work with payers, governments and employers to shift the risk from the Standard Model (fee-for-service, with all financial risk in the payer) to various models in which the provider takes on some risks (as with bundles, warranties, capitation, mini-caps, alternative quality contracts and other models) and the patients take on some risk for making a good decision (going to a clinic or an urgent care provider instead of the ED with a minor matter). Pilots show that when poor people are given coverage in the form of an HSA with deductibles, and when they understand how it works, they treat the money as their own, and conserve it, even when all of it is given to them as a subsidy. So a carefully titrated level of risk works across the spectrum of class.

Incentivized wellness. Work with employers, health plans and public agencies to get as many people as possible into incentivized wellness programs, which give people financial rewards (such as lower premiums) when they participate and meet simple goals. Correctly done, these programs reduce the actual costs for covering the whole population (including those who do not participate) by 10 percent or more.

Targeting. Find and go after that 5 percent, that 1 percent who are costing the most money. Some of the cost will be recoverable, some will not, but go after them anyway, because the costs spiral out of control once they cross your threshold.

Let me teach a technical economic term, in case you don’t know it. The term is bupkis. It’s from Yiddish and means nothing, an inconsiderable sum. Or, as one health care CFO put it to me, “lost in the noise.” That’s what it costs to reach out to someone with some smart prevention, or to treat them in a clinic, rather than treating them when they are hauled in to the ED comatose with something that could have been prevented or caught in an earlier stage. That’s the cost, relatively. Crumbs. Footnotes. Bupkis.

You can target in a number of ways. You can forward-base free or sliding-scale clinics in the parts of town from which you get the most costly cases. You can find ways to help the Federally Qualified Health Centers that may already exist in those parts of town. You can subsidize independent free clinics that already exist.

You can use “big data” from geographic information systems such as Stratasan GIS, Explorys Population Explorer, the Healthy Communities Institute and the free, open-source Community Commons to “hotspot” your community — or you can do a first pass on it just by talking to the cops and EMTs that come into your ED. You can establish a crack Camden-style team to go after the 0.1 percent toughest and most expensive individuals.

Some systems, like Spectrum in southwest Michigan, are setting up special clinics to go after and treat anyone who has shown up in their ED 10 times in one year.

Some doctors will complain that you are stealing their business. By definition, if these people are showing up in your ED with untreated chronic disease, either they are not those doctors’ customers, or those docs are not doing their job. Steal away.

Many people, clinicians and citizens, will tell you that those folks are untreatable, because they are addicts, or you can’t affect their behavior, and this and that. True of some, but it’s a numbers game. When the Camden Coalition of Healthcare Providers began targeting the worst, most complex, most expensive cases, they were able to reduce hospitalization of those they took on by 56 percent. Any way you add it up, that’s a huge saving.

Public health. You must seek partners in all of this. Payers and employers are the best possible partners, since they shoulder a lot of the cost burden with you. But federal, state and local public health officials are equally important. In my years of talking to health care executives, I continue to be astonished at how many of them do not even know the names of local public health officials, much less collaborate with them on a regular basis.

Healthy Communities. Finally, at the furthest remove from your ED threshold is the Healthy Communities movement. There are local groups in most places across the country, supporting programs dealing with everything from effluents to traffic to education to AIDS awareness. The return on investment is always large because the investment is so small compared with the ED visits, surgeries, premature births, and NICU and ICU use that they eventually prevent.

We will save much more money, shore up our finances and help solve the deficit problem when we stop waiting passively for people to cross our threshold and begin aggressively exporting health to those who need it the most.

As a healthcare speaker, writer, and consultant, Joe Flower has explored the future of healthcare with clients ranging from the World Health Organization, the Global Business Network, and the U.K. National Health Service, to the majority of state hospital associations in the U.S. Joe writes at imaginewhatif. This article first appeared in H&HN (Hospitals and Health Networks) Daily.

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Barry Carol

Bob – There is a very interesting article in current issue of Health Affairs titled “In Japan, All-Payer Rate Setting Under Tight Government Control Has Proved To Be An Effective Approach To Containing Costs.” Japan currently spends only about 8.5% of GDP on healthcare while more than 22% of its population is 65 years old or older. The U.S. spends over 17% of GDP. Japan uses a fee for service payment model for doctors, drugs, imaging and other non-hospital providers while hospitals are paid on a per diem basis with the daily payment rate decreasing as the length of stay… Read more »

What Barry leaves out, which is understandable , is this: What if government and insurers set their capitation payments on a budget? and more or less ignored the hospitals’ costs………….. For once in health care we would be dealing with price based costing, vs. cost based pricing. For a simple example………….. The payer says that tax revenues will give me $5 billion to spend in Minneapolis.. Step two, Minneapolis has 1 million residents. Steo three, the ACO’s in Minnesapolis are given $5000 for every resident they sign up. That’s it. No claims, no deductibles, no coinsurance. See you next year.… Read more »

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7 years ago

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DeterminedMD

I love reading these posts and threads, everyone trumpeting how they know how to fix the system and everyone should get a fair chance at health care. As someone above said, “bupkes”. As long as everyone has to be saved, irregardless of what they brought into the picture to their health care problems, like smoking for instance, and we have to keep everyone alive at end of life matters, because, hey, grandmom or granddad can’t die, the hell with finite resources and monies! As yet someone else said, I think MDasHell, there is no truth as long as there is… Read more »

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7 years ago

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Barry Carol

Joe – While I like the concepts of both bundled payments, especially for surgical procedures, and capitation, especially for primary care, better than the fee for service payment model in theory, the problem is that it’s no so easy for provider groups, including hospitals, to accurately estimate their costs from one year to the next. Indeed, the smaller the population being served and paid for, the higher the probability that a relatively small number of very expensive cases can blow up the providers’ budget. At the same time, if insurers set fixed payments at very high levels like Blue Cross… Read more »

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7 years ago

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MD as HELL

Our country’s healthcare costs are out of control due to the politics of give-away government; the unconstitutional direct-to-the-voter provision of a piece of the Treasury. The Treasury is empty so they are borrowing and stealing to avoid telling the truth: Grandma aint getting her lift chair, scooter, feeding tube or futile dialysis.

> … many of … the most expensive 1% and 5% of patients … are already covered by Medicare and/or Medicaid yet their care is unmanaged and uncoordinated … there is lots of potential to reduce costs with more intensive case management and better care coordination. Indeed. The question is why are we not doing that now? Largely because under a fee-for-service regime, the reduction in costs is reduction in income to the providers. We are not paying them to do this care coordination and intensive case management. Properly done, case management that actually is based on real trusted relationships… Read more »

> I wonder if you and I are trapped in the American fixation on user fees … we pay hospitals one patient at a time Indeed. This is what I mentioned in my second point, “Shift In Risk.” It need not be global-budgeted public hospitals, but it does need to be a titrated and complex shift in risk from the payers to the providers and, to some extent, to the patients. Here’s the difference: When you just global-budget a few big public hospitals, two things happen. The public hospitals are perpetually strangled for funds, and have great difficulty giving adequate… Read more »

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7 years ago

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Barry Carol

Joe – I’m all for going after the most expensive 1% and 5% of patients. However, many of these are already covered by Medicare and/or Medicaid yet their care is unmanaged and uncoordinated. With respect to the dual eligible population in particular, I think there is lots of potential to reduce costs with more intensive case management and better care coordination. I’m skeptical that there are many among the uninsured that are “frequent fliers.” Regarding healthcare spending in the U.S. as a percentage of GDP vs. other developed countries, the impact on our competitiveness is somewhat overstated, I think. This… Read more »

all good points, Joe, but I wonder if you and I are trapped in the American fixation on user fees. If we pay hospitals one patient at a time, then a sorrowful drug addict who goes to the emergency room has a ‘cost’ we have to adjust for. That is not the way we pay the police or fire departments. We give them one check a year and ask them to rely on professional judgement. Virtrually o one knows or care how much the fire department spends on older homes etc. What I am getting at is that larger American… Read more »

I wholeheartedly agree that U.S. citizens need to be more proactive when it comes to overall wellness and healthcare. Gaining an understanding of healthcare prevents you from becoming a victim to outrageous costs.

> As long as health care providers charge $20,000 for a $2,000 procedure … what is the real cost … cut to the true cost …. This is part of the problem, but in a deeper way than you hint at. Roughly speaking, no one knows what the “true cost” of a test or procedure or device is. No one, not even those who provide them. Not only is the cost accounting of health systems wretched, not only do they include huge unallocated overhead costs, they also include the costs of the supplies, devices, and machines from companies that themselves… Read more »

Anyone looking to pick a logical and empirical fight with Joe Flower had better check their policies’ limits and deductibles first.

Read his new book.

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7 years ago

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steve

What Joe said, but I would modify it. We know what other countries pay for the same care. We can look at countries with similar quality and, adjusting for PPP, look at what they would cost here. If you go to the extreme and use the NHS as your starting point, you find that we are probably paying 2-3 times what would be paid compared with the lowest in the world. This is far from the 10 times suggested above. There are problems using the NHS, but this gives us an idea of what our lowest possible price would be.

> That is just a huge distance from the estimate in the Health Affairs article that the uninsured cost the system $9,000 each. The HA article makes no such assertion. The study asserts that the people who received their health care from this clinic had cost the system on average almost $9000 each per year. The “uninsured” in this country include 10s of millions who in an average year use no healthcare at all — mostly the young, healthy and childless. Whereas those signed up for this program and using this clinic were likely in the 5% who use half… Read more »

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7 years ago

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tomd39

All these comments still assume that the dollar amounts you refer to are the real cost of providing healthcare. Whether it is $3000, $4500 or $9000, these are NOT the true cost of delivering health care to anyone. Cut to the true cost and these figures would be closer to $300, $450 or $900.

According to an article by Avik Roy, who is admittedly a right-winger, the total bill for uncompensated care in Massachusetts was $661 million. At that time Massachusetts had about 2% of the US population. So the extrapolated cost for the entire US of uncompensated care was $33 billion, i.e. exacdtly what I remembered from Holohan’s article. That is just a huge distance from the estimate in the Health Affairs article that the uninsured cost the system $9,000 each. Just to carry this further……. the cost to give Medicaid to all the uninsured would be at least $120 billion. (assuming a… Read more »

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7 years ago

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Peter1

Bob, I think the total bill for not having a system grounded on preventive care should not just calculate the direct costs of finally needing medical intervention but the costs to the economy of the side effects. Lost work days, low energy/low production days, errors, no motivation, mother needing to stay home to look after sick child, etc., etc. As well this strikes at the heart of the conservative mind set – it’s cheaper to have poor people with no health care and chronic conditions than to lift everyone up. It’s the old line, they know the cost of everything… Read more »

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